THE price of your Uber could rise by up to 20% after the government’s “Taxi Tax” in the Autumn Budget, experts claim.
While everyone was arguing about income tax and National Insurance last week, the Government quietly changed the VAT rules for ride-hailing.
From 2 January 2026, suppliers of private hire and taxi journeys will be excluded from the Tour Operators’ Margin Scheme (TOMS).
In HMRC’s own words: “This measure excludes suppliers of private hire and taxi journeys from being ‘tour operators’ for the purposes of the Tour Operators’ Margin Scheme.”
This means app trips will get more expensive – as 20% VAT is due on the full fare, not just the margin.
Kate Underwood, Founder at Southampton-based Kate Underwood HR and Training, said this will hit Uber, everyone’s pockets and also potentially put staff at risk.
She added: “If you ever needed proof that Rachel from Accounts has never tried getting a junior home safely at 11pm, this taxi tax is it. Small businesses use Uber because it is simple, cash free and safer. You see the driver, the reg and the route, and there is a record if anything goes wrong.
“That is not a luxury, that is how you do duty of care without losing your mind. Now those trips are going up in price, not because drivers got a pay rise, but because the rules changed and someone spotted a ‘loophole’.
“On its own, it is a bit more VAT. Add it to higher wages, NI, pensions, frozen thresholds and everything else, and the cost of being a decent employer just keeps snowballing. If Uber gets too pricey, the answer is not shoving staff back on night buses.
“It is setting up accounts with vetted local firms, getting texted car details and insisting on a quick “home safe” message. We will keep doing the right thing. We would just quite like Rachel to stop making it more expensive every single time.”
Scott Gallacher, Director at Leicester-based Rowley Turton, said he expects the price of your Uber will go up by up to 20%.
He added: “Although the Government presents this as a technical VAT correction, in practice it appears as an Uber tax that will drive up ride-hailing costs by 15%–20%.
“This is yet another example of intergenerational unfairness, with the youngest – who already face licensing backlogs, unaffordable car insurance and squeezed living costs – now paying more simply to travel safely.
“This change also hits people in rural and poorly served areas who rely on apps because they simply don’t have other transport options. It’s a policy that ends up punishing the very groups with the fewest alternatives.”
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, said working people will be hit by the tax.
He continued: “This is yet another example of Rachel Reeves pushing the glass ceiling of tax and VAT down lower onto working people. From 2026 the government intend to collect VAT on the full fare of taxi passengers.
“Meanwhile, passengers can look forward to the new experience of paying more tax without travelling any further.”
Photo by Daniel Monteiro on Unsplash
